There was this doubt about whether the GreenVolt shares would be considered just as a separation of something that shareholders already own – and thus not subject to any taxation – or if it were considered a dividend – thus subject to taxation. 

After consulting with a few law firms, Altri has come to the conclusion that, unlike what would be possible in the USA, this operation must be treated as a “normal” dividend distribution and not a de-merger.

This means that we’ll be paying taxes on the GreenVolt’s shares. 

Are you still with me? Good.

Also unlike what happens with dividends from other countries, Portuguese shareholders don’t get the gross amount of the dividend. There’s a withholding of the tax amount that never gets to the shareholder’s hands. They get the net dividend.

This means that Altri will need to keep 28% of the shares that are being distributed to the shareholders (28% of the 43% or 12% of the total shares outstanding) in order to pay the tax authorities.

This poses a problem. It’s Altri that will have to pay the amount due. Right now, we don’t know how much that will be because no one yet knows how much the 43% of shares in GreenVolt will be worth on the day of the Spinoff. And Altri must pay the tax authorities in cash, not stock.

That means that Altri has 2 options:

a) sell the shares that it will be withholding in order to raise the cash needed to pay the tax authorities;

b) use the cash on hand to pay the tax authorities;

I believe that they will be choosing option b) and they will keep the shares for a later sale.

Why is this important? Because there’s a strong likelihood that shareholders who were just given GreenVolt’s shares will be dumping them in the market the minute they get a hold of them. 

That selling pressure might lead to a drop in the share price. If Altri is also selling those “tax shares” in order to raise the cash, the selling pressure will increase, meaning that the share price could even go lower. We, as shareholders looking to sell GreenVolt, don’t want that.

I’m going to use the same math as the company did on the announcement.

For each 100 shares of Altri, shareholders will have the right to receive 25 shares of GreenVolt. But they’re not actually getting those 25 shares, because of the tax.

Shareholders will only be getting 18,435 shares of GreenVolt. But, as you might’ve noticed, we can’t get 0.435 of a share. Altri is solving this by paying the corresponding amount in cash to the shareholders (this amount, although received in cash won’t be subject to further tax because that has already been done in a previous step).

Are you following me so far? If you have doubts, please read until the end, and if they subside, do let me know in the Forum.

So, for each 100 shares of Altri, shareholders will be getting 18 shares of GreenVolt plus 0.435 shares of GreenVolt in cash.

How much money will these 18,435 shares be worth, we don’t know. It all depends on GreenVolt’s share price in the day prior to the “date of availability”.

That date of availability is yet to be set, but it should be somewhere in the second half of May.